EUR/USD – Dollar Takes Breather After Roller-Coaster Wednesday

EUR/USD has settled down on Thursday, after posting sharp losses a wild Wednesday session. Currently, the pair is trading at the 1.09 line. On the release front, French Industrial Production declined 1.1%, well off the forecast of +0.3%. In the US, the highlight of the day is Unemployment Claims. The indicator is expected to edge up to 267 thousand. On Friday,the US will release UoM Consumer Sentiment. The indicator is expected to edge lower to 87.4 points.

The euro took traders on a roller-coaster ride on Wednesday, as the markets were in turmoil following Donald Trump’s stunning victory in the US presidential election. EUR/USD started the day at around 1.10, but then surged in the Asian session, climbing as high as 1.1299. However, the dollar rebounded in spectacular fashion and climbed almost 400 points, as the pair ended the day just above the 1.09 level.

Hillary Clinton was widely expected to cruise to the White House, with almost all pundits confidently predicting that Trump had no chance of winning. Trump’s election victory which has already been labeled the most stunning win in US election history, sent shock waves across global markets to an extent not seen since the Brexit vote in June. As the dust begins to settle, it is already apparent that global markets were poorly positioned heading into the vote, overconfident that voters would reject Trump and hand Clinton a victory.

News of a Trump electoral victory also shook up the odds of a December rate hike by the Federal Reserve. The odds dropped as low as 40 percent earlier in the day, but recovered and surged to 76 percent. Currently, the odds are back at 71 percent, the same level they were at just before the election. Despite this recent volatility, it’s looking quite positive for a rate hike, which would mark the first rate move by the Fed since last December. Meanwhile, the markets will be watching to see if Fed chair Janet Yellen can work with President-elect Trump. During the election campaign, Trump harshly criticized Yellen, saying she was “too political”.

EUR/USD Fundamentals

Thursday (November 10)

• 7:45 French Industrial Production. Estimate +0.3%. Actual -1.1%
• 7:45 French Preliminary Nonfarm Payrolls. Estimate 0.2%. Actual 0.3%
• 9:00 Italian Industrial Production. Estimate -1.0%. Actual -0.8%
• 13:30 US Unemployment Claims. Estimate 267K
• 14:15 US FOMC Member James Bullard Speaks
• 15:30 US Natural Gas Storage. Estimate 53B
• 18:01 US 30-year Bond Auction
• 19:00 US Federal Budget Balance. Estimate -81.9B

Friday (November 11)

• 15:00 US Preliminary UoM Consumer Sentiment. Estimate 87.4

*All release times are EDT

* Key events are in bold

EUR/USD for Thursday, November 10, 2016

EUR/USD November 10 at 10:10 GMT

Open: 1.0919 High: 1.0953 Low: 1.0887 Close: 1.0903

EUR/USD Technical

• EUR/USD posted slight gains in the Asian session but has retracted in European trade
• 1.0821 is providing support
• There is resistance at 1.0957

Further levels in both directions:

• Below: 1.0821, 1.0708, 1.0557
• Above: 1.0957, 1.1054 and 1.1150
• Current range: 1.0821 to 1.0957

OANDA’s Open Positions Ratio

EUR/USD ratio has shown gains towards short positions. Currently, short positions have a majority (60%), indicative of trader bias towards EUR/USD continuing to move lower.

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